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MARK W. NELSON: Welcome attendees to the 29th annual Louis H. Durland Memorial Lecture. In 1983, Roy H. Park and a group of supporters endowed the Durland Memorial Fund to honor Lou Durland. He's former treasurer of Cornell University. And from this fund, we're able to bring you this memorial lecture series. Each year, we invite a distinguished business leader to campus to deliver a major address, and to meet with students and faculty.
I want to extend a special welcome to Barbara Collier, Lou Durland's widow, who joins us today. We're pleased. Nice. We're very grateful to Barbara for the generous endowment of the Louis Durland [INAUDIBLE] with management. Barbara has joined us at this event for many years and is truly part of the Johnson family.
Accompanying Barbara are her friends George and Bobby Schneider. George recently retired from teaching at Johnson after 15 years. So please also help me welcome George and Bobby.
This year's Durland lecturer is Peter Coors, Vice Chairman and Chief Customer Relations Officer of Molson Coors Brewing Company. We are indeed fortunate to have Pete, prominent leader and Cornellian, joining us today. Pete's professional career in the brewing business follows a Coors tradition that has spanned more than a century and five generations of the Coors family.
Peter is the son of Joseph and Holly Coors, and is a great grandson of Adolph Coors who founded the Golden Brewery in 1873. Pete's outside corporate board of director memberships include Energy Corporation of America and the American Enterprise Institute. He's president and a trustee of the Adolf Coors Foundation, and he has numerous and diverse civic responsibilities. A proud Cornellian who holds a bachelor's degree in industrial engineering, Peter earned an MBA from the University of Denver. And he's also received four honorary doctorates.
Peter is joined here today by his wife Marilyn, also a Cornellian. Marilyn is associate professor at the Center for Bioethics and Humanities in the Department of Psychiatry at the University of Colorado Anschutz Medical Campus where she teaches, publishes, and conducts research on the ethics of human genomics. Pete and Marilyn have six children and 13 grandchildren. Please join me in welcoming Pete Coors.
PETER COORS: Thank you very much, and a pleasure to be here. I was going to have free beer, but Marilyn reminded me these are students. And some of you may be not in of legal drinking age yet, although I suspect most of you have sampled some product at some time or another. I thank you for that elaborate introduction Dean Nelson. I'm pretty sure that I'm not here because of my Cornell academic credentials.
If you were hoping for a Phi Beta Kappa or a Magna Cum Laude, you're in the wrong lecture hall this afternoon. But I would like to add maybe just a little flavor to my introduction that maybe help you know a little bit about-- more of who I am. Marilyn and I were married three months after graduation. That's unheard of today, was unusual in those days. I must say our roommates married each other and are here today Steve and Ingrid Tyler.
I don't know whether it rubbed off. They followed soon after in our footsteps. Great to have you two here. So we've been married for 47 years. I believe in a free economy. I'm a capitalist. I believe in limited government, liberty, and personal responsibility, and the rule of law. They're basic things that I've held, actually, for well over 50 years. So when I was here, yes I was also a capitalist then. Not always popular on this campus, but we got along.
And I think it's important for you to know that I think that wealth in life should not totally be measured by financial success or material accumulation, but also by successful relationships with family and friends, and how well you serve others. And hopefully, that's a little bit of a theme that comes through. I want to talk a little bit about a transformative transaction that took place last year for Molson Coors.
And I think, for the business students here, you might find that interesting. But then, I'm going to shift gears totally, and actually it may be the real reason I was invited to speak It's a result of my interest in diversity, and diversity in the broadest sense. So I'm going to spend some time talking about that. Given the opportunity to be back here on campus at my alma mater, the thought of-- the importance of promoting diversity of thought, healthy debate, and honest and open conversations about all kinds of different things are so important to the campus. So I'll get to that in a minute.
Let's start with the image of the West. This is really where I got started in the beer business. This was an interesting slide that I had some help with our folks in Golden, and I thought it was going to be a wonderful picture of the Rock Mountains. Well it is, except this is the Teton Range in Wyoming. I've been on top of the Grand Teton, which is a great climb. But it just is meant to depict how important the West is.
I grew up in Golden, obviously, Golden, Colorado which is a lazy town about 15 miles due west of Denver right in the foothills. And I had a wonderful childhood growing up there, went to prep school at Philips Exeter Academy. I couldn't wait to get away from my brothers. Some of you may have that same experience at some point in your lives. I didn't have any sisters, so that was not an issue.
And I had the great fortune of being able to come to Cornell. I was an admissions experiment. The social engineering dean at the time, Don Birth, convinced the admissions office that the college needed to have some more diversity, which meant admitting to a handful of students without high deck academic credentials. I guess they thought there were too many eggheads being admitted. I certainly wasn't one of those but, evidently, had some other redemptive qualities that perhaps added to the social fabric of the community-- lucky for me.
think there were a dozen or so of us that [INAUDIBLE] that special treatment. And I can say that most of them didn't make it. I was lucky enough to be well coached both academically and athletically. And I made it through. Anyway, following graduation the pull of the West brought me back to our roots in the West where I'd done graduate school at University of Denver for my MBA. And Marilyn and I were married.
And she got her degree in cytogenetics. I couldn't even pronounce it at the time, but I enjoyed the outdoors, [INAUDIBLE] our beautiful state, and the values that the West represents. And of course, we still had a family beer business. And I needed a job. I was talking to some students earlier today. And I said, just go get a job. Everything will work out eventually.
At the time, in the late '60s and early '70s, the Coors Brewing Company, Adolph Coors company, was still a pretty small outfit. We were selling beer only in 11 Western states. And in 1969 when I graduated, our annual volume was 6.3 million barrels. Barrels don't mean much to you, but for you students, that's 12.6 million kegs, just to give you a perspective of the magnitude of things. It was 87 1/2 million cases. And if you're interested, that's about 12,000 rail car loads of beer.
To settle some fairly significant estate tax problems in 1975, following the death of Adolph Coors Jr., we entered into an IPO. We raised money to pay those estate tax problems. And we traded as a public company in 1975 for the first time. Now by the time-- and a lot of time between '75 and 2000-- but by the time we hit 2000, Coors Brewing Company was in every state in the United States, and a couple of foreign countries as well.
But it was still only about 10% of the US beer market. We were doing then 23 million barrels. That's 46 million kegs, and 44,000 rail cars a year. Who's counting? But that was all about to change as we entered into the 21st century, and a lot of activity began to happen. Here are the founders of Molson Coors, Adolph and Mr. Miller. And who else is on there? Oh, Mr. Molson, John Molson.
And so, let me just walk quickly through some of the milestones that happened in the early part of this century. In 2002, we went to Europe and bought the Bass brewing interests, beer interests, in the UK, England, and Wales-- which then formed Coors Brewers, LTD in the UK. A major brand was Carling. For those of you who've been to England, it's the largest lager brand in England. It was a big departure for us. It was a $1.7 billion transaction.
I talked to some analysts after this happened. And one of them said, well, we knew you had about that much capacity, but we didn't know you were going to spend it all in one place. But it's been an outstanding acquisition for us. In 2005, we merged with the Molson family to form Molson Coors, which is the name-- when I say our company now, I mean Molson Coors Brewing Company. It was a merger of equals.
Molson family put their vote-- we have two levels, two categories of stock. We have voting stock and non-voting stock. Molson family put their voting stock into a voting trust in Delaware. We put our voting shares in that same trust. And so, we have equal ownership of the voting rights. So we have negative control over a public company, but not strong positive control. And that's how we put the thing together.
We have a 13-member board of directors, of which no more than two may be Coors family members, and no more than two can be Molson family members. So we have four family members as part of the board. The chairmanship rotates every two years between the-- it doesn't have to be a family member-- but between the Coors family and the Molson family. So I'm Vice Chairman until May. I'll be chairman again, if I get duly elected, and which I'm hopeful for actually. This would be good.
That merger has gone very well. We get along very, very well. And we have an outstanding group of outside directors. In 2008, we were fighting the battle against Anheuser-Busch and Anheuser-Busch InBev and needed to have more strength. So we were able to put together a joint venture with SABMiller, with South African Breweries. And they were bigger than we were at the time. Their economic value was 58%. Our economic value was 42%.
But we had equal voting rights, and the additional incremental value was reflected in non-voting shares. So again, everything went along fine as basically 50-50 joint venture partners. And let's see if I've caught up. We StarBev. We purchased a company called StarBev in 2012, which encompassed nine Central European countries, including Czechoslovakia, Hungary, Bulgaria, Croatia, and several others-- the big acquisition that gave us a position in Central Europe.
And then in 2016, just last year, Miller-- what we call the Miller-Coors transaction, which made Molson Coors the number two brewer in the US and the third largest brewer in the world. And I could spend, clearly, an hour or two with each one of these transactions. They're all pretty interesting. But in the space of, basically, less than 15 years we went from being a relatively small US brewer to being a major player globally.
So I want to spend some time with that transaction particularly because it's so current. This was a game changer for our company. We stated, at the time of the announcement, that that was the case. It nearly doubled the size of our company. It made us the third largest brewer in the world by profit, allowed us to consolidate control of a leading North American brewer, and a portfolio of iconic brands worldwide. We acquired all of the Miller brand rights worldwide.
It materially strengthened our business in the biggest and most profitable market in the world, and that's the US. In addition, the acquisition of the Miller brand [INAUDIBLE] provides us with opportunities to deepen and expand our presence in some high emerging growth markets that we haven't had an opportunity to be in before. It was unique because we had good knowledge about the business because we ran it, basically, since 2008.
So we didn't have the integration complexity, at least running the business, that normally is found in a deal of that size. So very simply, we knew the business, the players, the markets, and the brands. [INAUDIBLE] was relatively easier [INAUDIBLE] the acquisition. It made tremendous sense to us strategically. It made sense to us from-- we thought it was reasonably priced. And it was consistent with our company's strong commitment to [INAUDIBLE] attractive, long-term, top-line and bottom-line growth.
This next slide is just simply a calendar. This is October 2015. This is when this all came down. It was made possible because of a much bigger deal. And it was contingent on a bigger deal, and that was the acquisition of Anheuser-Busch InBev, which I'll refer to as ABI, of the SABMiller business worldwide-- the number one and the number two largest breweries in the world.
So when we established the Miller-Coors JV in 2005, part of the deal was that we had an agreement that if either company were sold the other company had the right to purchase the shares of the selling company in the US JV. So when SABMiller agreed to be taken on by ABI-- that we [INAUDIBLE] buy those shares. It was interesting because ABI knew that we had those rights. And given the obvious antitrust issues that existed, clearly in the US, but in some other places-- they didn't have much choice but to agree to sell the SAB shares in the US [INAUDIBLE] Coors.
And that was agreed to in October of 2015. It was a handshake deal, and it only took four weeks to hammer that out. And it took longer to get the details pounded out by the lawyers, and the bankers, and the accountants. But in four weeks our CEO, Mark Hunter and the CEO of ABI, Carlos Brito, agreed at a purchase price of only $12 billion. That's a lot of money.
I remember calling my uncle, who's now a 100 and still very, very with it mentally, physically losing his capabilities-- but I called him. And I said, Uncle Bill, we've just agreed to purchase the SAB interest in the US business and their brands globally, the Miller brands globally. And he said, how much? I said $12 billion. There's a big pause. He said, that's shocking. It was lot of-- it was shocking.
So there were a few more weeks where the lawyers put all of everything together and hammered everything out. But to have been able to come to an agreement in principle in four weeks is pretty remarkable. There are always some interesting stories in these deals. And my favorite was during the negotiations in New York, each of the parties had their own kind of war rooms. And then, they get together in a central conference room and then go back and forth.
And while this was all going on, there was a plane flying outside the 42nd floor of this office building on the Hudson River. And leading up to the final handshake of the agreement, the ABI advisers and Carlos kept seeing this yellow plane with a Coors Light banner flying back and forth in front of the window. And it, of course, happened it was coincidental. It was the World Series, and it was a promotion that our marketing guys in New York were doing during the ballgame.
But of course, we didn't tell Brito that. Either way, it worked pretty well for our deal. Announcement day was November 11th, 2015. And we formally announced the deal and received-- it was received very well. This was 2015. It was received very well by investors, by our employees, and by the media. As it turned out, we happened to be up in Canada that week for an existing Molson Coors board meeting, and so we were able to celebrate with the Molson family up in Toronto, and with our employees in Canada was kind of a unique special deal.
And I was drinking beer at 8 o'clock in the morning, which was great. But we were not out of the woods by a long shot. For our deal to be able to go through the ABI purchase of SAB still had to be cleared by regulatory authorities, not only in the US but across international jurisdictions. Importantly, South Africa, which turned out to be one of the most contentious issues, the Chinese government, the European Union, and of course, as I said, US Justice Department.
As part of this process, we had to testify in front of the-- I let Mark Hunter do that-- had to testify in front of the Judiciary Committee, as well as the ABI folks and Carlos Brito. And in December, Mark Hunter presented our case to the committee. Our argument boiled down to, basically, well, it won't work unless we get the other share of SABMiller piece of the US business. And that's the only solution to this antitrust issue. And finally, the Department of Justice agreed to the whole proposition.
Now eventually, we received all the required approvals, [INAUDIBLE] October of 2016, just about almost exactly a year after we had signed the deal to begin with, we officially closed and began integrating the Miller-Coors business. It's also the day that we wrote the check. I had suggested that we have one of those big checks like they have at golf tournaments, with so many zeros you can't get it on one page.
And they said, no, no, no, no-- we don't do it that way anymore. I said, well I just want to sign the check. And they said, no, no. We don't sign checks. We push a button. So the morning of October 16th, we officially [? closed. ?] I pushed the button to transfer $11,999,999,000 to consecrate the deal. [INAUDIBLE] says, what happened to the other $1,000. Well, we had transferred the other $1,000 a week earlier to make sure the system worked.
I always thought that was a much better number, $11,999,999,000. I don't think I'll ever write a check quite that big again. Maybe my kids will at some point in time, but that's another story. Later that morning, our lawyers received a call from Bank of America wanting to be sure we really intended to transfer $12 billion. So we all had a big laugh about that. The smoke is still settling on that deal.
And Coors finished 2016 with about 78 million barrels of worldwide volume. Well, you can calculate the kegs. Net sales of about $11 billion, and EBITDA of about $2.4 billion. Quite a transformation from a sleepy little company in 1969 after I graduated from Cornell.
One more slide here on the transaction. This is a white board, and I don't expect anybody to read it. It's even hard close up to read it, but this is a photo that sits in one of our lawyers offices even still today. And as I say, it's impossible to read, but this lists all the countries around the world where we still needed to review regulatory requirements and set up new distributions contracts-- mostly as a result of having acquired the Miller brands around the world.
We, I think, were in-- before this transaction-- were in about 34 countries. And SABMiller-- with Miller brands we're in about 70 countries if I'm not mistaken. So it was a lot of detail work to try to figure out supply arrangements, contracts, joint ventures, and those kinds of things. Given where Adolf Coors started, in that small little town in Golden, Colorado, it was front range basically as a craft brewer.
We can talk about craft brewer in the Q&A section if you like. This list of all the countries where we are operating today is a testament to the patience, the perseverance, and the long-term vision [INAUDIBLE]-- the families, I should say-- have as a company, and the support our board, employees, and shareholders have given us through this process. And I think the comment I liked best talking to employees that morning was, I thought that Adolph would be as proud as I am that we were able to make that happen.
Now happy to have questions about that, or anything about the beer business here in a minute. But I want to change tone here. And I don't want to lecture, but I think it's really an important message that I want to share here on the campus. We picked this slide because, as John Cleese used to say, and now for something completely different.
So changing gears completely here, I've really been curious about the divisiveness and level of divisiveness in our country today. And the sheer virulence sometimes of that divisiveness. I was struck, as an example, by the fact that I think it's kind of a phenomenon that classes were canceled the day after the election because some students were just paralyzed by the results of a democratic election not going their way.
And so I became curious about [INAUDIBLE] having such a difficulty [INAUDIBLE] with such a change. In fact, Marilyn and I, we've heard a lot of stories since the election. Marilyn and I have a very good friend who was in one of her good friend's weddings 50 years ago who, after the election said, I'm unfriending you on Facebook, and we're not talking anymore. Now that's pretty serious. That's traumatic in my opinion.
Just because she learned that she voted for Trump and didn't fall in line. So we are so privileged to live in the greatest country on Earth. And maybe it's not perfect. Maybe even not perfect by a long shot. As far as-- I've traveled a lot around the world. I'm always glad to be back here. We live in a land of vast resources, people of incredibly diverse backgrounds, experiences, and talents.
The best universities, the strongest military-- mostly people committed to working to support themselves, their families, and the community. We're rich in the pursuit of innovation, and I could go on and on of the blessings that we have in this great country of ours. Vast numbers of people from around the world want to come here to live and enjoy what we have, the quality of our life.
Yet, there's a little conundrum. I find this fascinating. We hear that America is capitalist and greedy. Yet half of the population is subsidized. Half the population is subsidized. Yet, they think they're victims. They think they're victims, yet their representatives, the people they elect to office and who promise to do good things for them run the government.
And their representatives run the government. Yet, the poor keep getting poorer. You get the idea of what the conundrum is. The poor keep getting poorer. Yet, they have things that people, other countries, only dream about. Yet, they seem to want America to be more like those other countries. I find that fascinating. And it's worth thinking about.
We have this big Republican, Democrat kind of divide. And so, why are we so divided. Why is there so much vitriol and sometimes violence, intolerance, and incivility. We love to paint people with labels. And it doesn't matter-- liberal, conservative, moderate, progressive-- and even in the extremes racist, homophobic, feminist, misogynist-- of currently the popular, fascist. What do these labels really mean?
Liberal is supposed to be broad minded, not strict in observance of orthodoxy, or tradition, or established ways. Conservative tends towards being disposed towards existing views, conditions, and institutions. Modern simply shuns extremes, while progressives are frequently known to be people who encourage change in society, or in the way things are done, sometimes quite aggressively and with loud voices.
Everyone, with the possible exception of some extremists I suspect, embody parts of each one of those labels. You can be liberal in one sense and conservative in another. I find myself in this-- I don't see that as a conundrum. It's a paradox from time to time. In fact, liberals sometimes are very conservative because they want to protect things that they think are important.
Well conservatives sometimes are very open minded, not always, but sometimes. Some people who label themselves as being in favor of diversity can be very anti-diversity and expecting everybody to be conformist to their point of view. If you don't agree with their point of view sometimes, there's just no debate. They just shut down and they cast you off. I shared a little article with [INAUDIBLE] social groups.
If you go outside your social group with a thought or an idea that is not consistent with your social group, you get ostracized. Pretty interesting. So why are people so mad at each other, and prone to anger and even violence when they don't see things going their way? It's perhaps because we've become more and more extreme in our views, and consequently intolerant of other people's perspectives.
I don't have an absolute answer because these are rhetorical questions, of course, other than to suggest that we all chill and develop a greater sense of civility, respect, and patience with each other. And perhaps that's easier said than done. I decided in preparing for this wonderful endowed lecture, the Durland lecture, that I would subscribe to that Cornell Daily Sun, find out what's going on campus these days. And it's been really interesting. Interest [INAUDIBLE] students.
I hope students read this. I don't know that I read it too much when I was at Cornell. But I can tell you that things haven't changed all that much since 1969. And '69 was a time of considerable turmoil on the campus. We were engaged in a conflict in Southeast Asia. We had civil rights issues. In fact, we had black students taking over with guns the Willard Straight in, I think it was the spring of 1968.
A couple of fraternity brothers and I tried to get in and take it back, and the campus police were mad at us, which I thought was pretty interesting. But I've been encouraged by a couple of articles that I've read and in the Daily Sun that give me a great sense of optimism. One appeared February 7th, was written by freshman Margaret Lee about the concerns over President Trump's executive orders on immigration.
She's a foreign student here. She said, quote, "I believe that greatest strength of Cornell and the larger American community is it's diversity and openness to different opinions," unquote. And she continued, quote "a recent trend has been taking place in which the left and the right shun each other's opinions," and concluded, quote, "we should reserve any immediate assumptions we hold for the Trump administration."
And I think she was talking about it generally, "and the proponents until we have fully evaluated the policies." In other words, Margaret was really calling out for patience and civility. The other opinion piece was written by Senior Mitch McBride. He has been evidently controversial on the campus. He was chair of the Codes and the Judicial Committee. And on March 2nd, he evidently videotaped a group of students who were denying a campus speaker the right to express his views.
And it resulted in this comment from him. Quote, "a smear campaign of character assassination against me," he said. And he subsequently was removed from his role by the university assembly, according to him because he was not-- he did not apologize to the protesters for having videotaped them. I found that just really interesting. The last couple of weeks ago you had Newt Gingrich here on the campus, and as a guest of the College Republicans.
And a couple of-- and he said, quote, "I cannot tell you how delighted I am with the attitude, and the tone, and willingness to really talk about and share ideas." He said, "I'm going to tweet about how great the students are at our Cornell." I can tell you, on the campus all day today I've gotten exactly the same impression. And it's an impressive and positive impression. I'm going to put up a quote. It was attributed to Voltaire, but actually, it was written by the Beatrice Evelyn Hall in her 1906 biography of the friends of Voltaire.
I like one better, which is, quote, and this was Voltaire, "the right of intolerance is absurd and barbaric." I think that probably says it as best as I could. Freedom of speech, exploring diverse opinions and views, honest disagreement, and civil discourse just has to be the foundation of higher education. And I would expect it particularly here at Cornell, my alma mater. In fact, I believe it is the critical element of diversity.
We talk about diversity in terms of race, and religion, and sex, and all the other things. But this is a type of diversity that must exist here on this campus. Based on what I've read in the Daily Sun, I am encouraged. Encouraged by the administration, the faculty, the students, and most encouraged and it calls for everybody to really stress ideological diversity. We'll get to the best solutions, and you can't get a good, classical liberal education if you're not willing to debate in a civil way.
And so, that's-- we must shun ideological conformity I guess is the message. So I want to say how much I appreciate the endowment of Mr. Durland, who I think was treasurer when I was a student here-- and must have done a good job because it looks like the university is in pretty good shape financially. So thank you for the support you've given to that. And thank you all for the time we've had to share today.
MARK W. NELSON: What a wonderful talk. Thank you so much.
PETER COORS: Thanks very much.
MARK W. NELSON: That was great. And we have an opportunity now for some Q&A. And I promised Pete the opportunity to sit on a stool while doing that. So you don't have to stand the whole time. And my only half facetious opening question is, how long did you pause before you pressed the $12 billion dollar button?
PETER COORS: I think my finger was shaking. No, it was pretty easy, but there was a loud sucking sound coming out the-- it was quite an extraordinary experience to be able to do that. I really thought that we should have had a communal button that we could-- all the people that worked hard on it. This is a very, very complex transaction and the team that were able to pull this off really did an extraordinary job.
MARK W. NELSON: Could I ask about the first transaction with the Molson family? And actually, I love the way you said it. We merged with the Molson family. I mean, there were two companies. But they're two family businesses merging, with rich traditions, each of them. And it's wonderful how well it's gone. But was there any, I guess, difference in culture, or difference in ways of thinking about the family business as you came together.
PETER COORS: Yeah. Each one of these changes brought with it some cultural challenges. I think the Miller and Coors coming together was probably the biggest one because we were virile enemies for decades. And to try to merge those cultures was difficult. We'd been doing business with the Molson family in Canada for 30 years when we did that transaction. So we knew them well.
We knew their culture well. They brought things to the party that helped the entire enterprise, as well as we did. And it was very civilized. Someone asked me a question earlier today, one of the students, about does the board ever try to line up with one family opposed to the other family and so forth? And I basically said, now we have board members that have too much integrity to do that.
And our board, we have nine outside-- what we call outside independent board members. And they really like to have the family together-- the families together on these issues as one. And we've had a couple of times when we kind of bridled a little bit on what the other family was thinking. But we felt it was important for us to sit down and either compromise or come to an agreement that we could give confidence to our independent board members that we were aligned to and we should go down the road together.
So we get along very well. Is it perfect? I don't think any family in here is perfect. We have our differences. But when we go to a board meeting, we make sure that we're on the same track and agreement.
MARK W. NELSON: It's tremendous
PETER COORS: Works well.
MARK W. NELSON: Now we also-- I want to make sure that I open the floor to questions. And I think we have roving microphones available. So.
PETER COORS: There's one right back here, so--
MARK W. NELSON: Right back there. If you wouldn't mind.
AUDIENCE: Hi, [INAUDIBLE] from Dyson School of Economics. Thank you for inside information. I wanted to touch base on craft brewing market with the changing--
PETER COORS: I thought nobody would ask that question.
AUDIENCE: Yeah, the market structure is really changing with the craft brewing picking up really well, while the overall beer market kind of is constant, in the US at least. And I know lots of big companies are now buying the small producers, not the be mergers that we're here, here, and there. But sometimes they change the company they buy. Sometimes they don't touch the company's culture-- kind of providing the capital but not really changing how they do the business.
How your company's dealing with this situation? And I don't know if you can shed any information about that. Thank you.
PETER COORS: Well, it's kind of if you can't beat them, join them. And so, we've purchased one cidery in Northern California called Crispin. And we've purchased four craft breweries, regional craft breweries-- Terrapin in Georgia, Maverick in Texas, St. Archer in San Diego, and Hop Valley up in Oregon. And we're trying to figure out how to make sure we don't upset the entrepreneurial spirit, and the innovative spirit of those craft brewers.
Because it's a different world. Their expectations-- we have different expectations for our returns to our shareholders than they do, frankly. And so, there are some real challenges in getting that integrated. Pub breweries, where small breweries sell their beer in their pub-- extremely profitable. They're very difficult because they operate at the exclusion of any other brands-- and not just ours, but import brands, whether it be Corona, or Heineken, or Modelo, or whoever.
And they compete against our retailers, our other retailers that we're trying to build their business. It's a very dynamic market at the moment. I don't know where it's all going. There are 5,300 licensed brewers in the United States. There are a couple thousand more that are either pending or inactive licenses. But there are 5,300 active licenses. Now, you go in a liquor store, you'll find there's not enough space for 5,300 different.
And most of them have multiple brands. They got an IPA, they've got an IPL, they've got amber lagers, they've got all kinds of goofy stouts, and stuff. So there just isn't room for 5,300 brewers. I don't know where that all ends up. I want to shout out to our distributors from up here that have been so generous. I was checking the dates on the beer last night in the bar. And I said, I know that Peter's been here with his team because the date are really fresh.
If you ever want fresh beer at the Statler, this is the time to get it. They do a great job. They're required to be sure our beer is fresh in the marketplace at all times. And that's part of their role. We have a three tier system. Our beer has to go through a wholesaler before it can get to retail. It's another issue we have with pub breweries is that there's no middleman.
And so, their profitability takes a slice out of our distributors. And so, that's a challenge for our distributors as well as it is for us. I don't know where it's going. We asked the young lady at the bar last night if she liked IPAs. Oh, I love IPAs. I said, it's got all that hops in it. You don't taste any beer. All you can taste is the hops, and I don't get it. How many you guys like IPAs?
Now, look at that. Old guys too, I mean, pardon me, older guys. I just-- hops is a really important flavor ingredient in beer. But it shouldn't be the only ingredient. And when it overpowers-- craft beers make up 15% of, roughly, of the volume in the United States. They use 50% of the hops. It's impossible for craft breweries to make a light beer. They can't do it.
It's just-- they just can't do it. And so, they use a lot of hops to flavor their beers. And so, what you're buying is hops. I don't mean [INAUDIBLE] critical. But I came through in an era where light lagers exploded and continue to be 50% of the total beer market. So I don't know where craft breweries are going. We also have an experiment we're doing-- we've done in the last six years in Goldman call AC Golden Brewing Company.
It's kind of a skunk-works where we decided we would make a brand called Colorado Native. It's brewed only with Colorado ingredients and Colorado packaging. It's sold only in Colorado. It's operated by its own independent group of brewers and salesmen. It's like a craft brewery. It's done very, very well. But it's tiny. I mean, it's 15,000 barrels. And you know, we talked, what, 78 million barrels.
Our brew kettle sizes vary from about 400 barrels to a 1,000 barrels. And a lot of craft breweries don't do a 1,000 barrels in a year. You can't brew once a year and they expect the beer to be of any kind of quality. So it's a challenge for us. And it's one of the reasons we're looking at buying these smaller regional craft breweries, because we can't really do it internally.
Blue Moon is one of our brands. Blue Moon started about 20 years ago, a little over 20 years ago. I tried to kill it twice. It's now the largest craft-- thank God I didn't. It's the largest craft beer in America, probably in the world. And it's just different. I thought, nobody is ever going to put fruit in beer. Are you kidding me? What a dummy I was.
I like it. I had a couple of them last night at the bar. So as I say, it's a very dynamic industry. It's not sitting still. There's a lot of curiosity, a lot of education going on in biology and chemistry for young people who say, yeah, I'd really like to get into learning about brewing. So it's a challenging and interest [INAUDIBLE]. Did I answer you question mostly?
AUDIENCE: [INAUDIBLE].
AUDIENCE: [INAUDIBLE] to be here today. I have the very good fortune of working with Dan [? Vanderbleek ?] Business Initiative. And I hear a lot of students talk about [INAUDIBLE] their desire [INAUDIBLE]. dividends [INAUDIBLE] come back. My question for you is, did you see yourself being in beer, the beer industry, after you graduated? And if so, what [INAUDIBLE].
PETER COORS: All right. I know. But the question basically is we have a lot of students here at Cornell who are parts of family businesses. Sometimes-- I talked to somebody who was fifth generation I think. Did I get that right? Can remember. And I'm fourth generation. We have fifth generation members of the family in our business now.
Marilyn and I were going to go work in Europe. And my dad called me one day, and Marilyn says, I know why you're-- it was a Sunday afternoon. And she says, I know why you're going to Golden. Just say no. And I couldn't say no to my dad. He said it's time for you to come back and work in the business. I believe that it's valuable to go out and work somewhere else-- that you can come back to your family business with a credential, you've accomplished something.
You have more self-confidence, and if you've done well, the people you work with, the other non-family employees will appreciate the fact that you can do it on your own. And so, if you go straight back to the business, people say, oh yeah, just-- here comes the kid. I'm going to have to put up with him, and then we'll get some others later. So I think that's really important.
I didn't really think about going into the business right after school. Marilyn and I were going to go to Europe, as I said, and work for a couple of years. And then, I thought I would always end up back in the family business. Becomes more and more difficult the bigger the family is, because at some point in time you have to pick and choose who's going to-- which family members are going to be in, and which ones are going to be out. It's emotionally difficult.
It's probably a good reason a lot of family businesses don't survive more than three generations. Some businesses, in fact the Smith family, the third generation said, we're just not interested in the trucking business. Every family is different. And one of the things that gives us, has given us some benefits of keeping the family business together, at least the assets together, is that we have generation skipping trusts that were put together by my grandfather in the late '40s, which have allowed us to not distribute the assets, the corpus, [INAUDIBLE].
So it's one way to keep things in the family. But [INAUDIBLE] if there hadn't been anybody interested in wanting [INAUDIBLE] in the business, then it would be dissolved. Every family is different. [INAUDIBLE] they're-- if the family business doesn't-- Is there a hand held? Oh, here it goes.
If a family business doesn't grow faster than the family, it's destined to failure. I think there's another one over here.
AUDIENCE: Hi, thank you. Aaron [? Bollay ?] from Johnson. So some of the criticism of the consolidation has been something like a 6% increase in the price of beer. So maybe you could touch upon some of the positive impacts of consolidation in the beer industry on a consumer, on an average consumer.
PETER COORS: Oh, positive impact. I think one of the-- people tend to think, and why the government has a difficult time with consolidation is they say, well, you get together and there are fewer competitors. And therefore, you'll raise prices. In fact, just the opposite has occurred in the beer business. Beer prices are, from a brewer's perspective ridiculously low. From a consumer standpoint they're probably ridiculously high.
But beer prices haven't really change that much in the last 20 years. A case of beer [INAUDIBLE]. A case of beer today, and [INAUDIBLE] $9.99. Was $9.99 when I was in college. I think it's--
MARK W. NELSON: Depends what beer you're buying.
PETER COORS: Well, for us it was Utica Club, whatever we could get. But it's really pretty interesting. Here's a craft beer story that I like to tell. I was in Indianapolis at a large liquor store. Their craft beer section was bigger than their wine section. I think they had hundreds of craft beers in there. And I watched this. I like to watch shoppers when I'm in a liquor store to see kind of what they're interested in, what they're buying.
And this young man came in. He had a motorcycle helmet under his arm, and he had a t-shirt on, and cut off shorts, and tennies. And he was going up one aisle and down the other of the craft section. And he'd pick out a beer, and he'd put it back, and then pick out another one. And he go to the store guy that was sitting there in the craft section. He said, how come you don't have this one anymore? He says, well, we couldn't keep it on the shelf. It got old.
OK and then he'd go down, and he finally picked up one beer and walked off to the cash register. I was very curious. So I said-- I went to look, and the one 11 ounce, not 12 ounce but 11 ounce bottle of beer was $11.99. So he's a kid on a motorcycle. This is kind of odd. So I went up to the cash register. And I says, I hate to bother you, but you know, I'm curious about this beer you decided to buy.
And I said, for $11.99 you could have got an 18-pack of Keystone and had a weekend. And he looked at me like I was nuts. And he said, well, he said, you don't know. This beer is really special. I said, 12 bucks for an 11 ounce bottle of beer. What's so special about it. He said, oh, this beer is fermented with the most expensive cocoa beans. You know the ones from Vietnam that the weasels eat and poop out.
And I was sitting there. I'm sure he thought-- I thought he was nuts. He thought I was nuts. I couldn't understand. It's hard for me who's grown up saying, oh you know, we get a case of beer and have a weekend. I didn't get it. So I told him, I says, I just don't get it. He said, oh, my friends are going to be so jealous.
That's the craft beer market that we're living with today. And it's very difficult for a guy that's used to millions of barrels thinking about 500 barrels in a craft business.
MARK W. NELSON: Did you introduce yourself to the guy?
PETER COORS: No, I decided that he already knew I was crazy. I didn't want to do that. Time for one more?
MARK W. NELSON: We have time for one more question.
PETER COORS: I'm glad, nobody has asked me for a job yet. That's good.
AUDIENCE: I was Not to. No. So, I appreciate you taking some time to kind of give a little diversity political message as well. So I'm wondering what you can do, and what you guys do as a company, to spread that message of diversity of thought and encourage intellectual debate in a time where people are at odds.
PETER COORS: Well, all you can do is talk about it, and try to be tolerant of the other side. I happen to be on the what one would call right of center. I have many, many friends who are left of center. I like to talk to them because we can have debates. In college campuses today, a large percentage of college students think socialism is the answer for the future.
I like to talk to them about Venezuela, which is a great example of socialism. And it's destroyed the country. And you can get into-- I try not to get into religious discussions. But in terms of political ideology, I think it's really good to have debate. I learn a lot every time I talk to somebody who has a different point of view. I may not always come around to their point of view, but I understand them and can understand how to deal with them in a civil and reasonable way.
I'm on the board of the American Enterprise Institute, which is considered to be a conservative think tank. But they had their World Forum here back a month ago in March. And we had, I think, six Democrat members of Congress there. Larry Summers, who's probably left the center-- and having debate in that environment is just so healthy. It's really fun. To have a situation where people stand up and say, I don't care what you say. It's got to be this way.
It's not fun. It's not good, and it's not healthy. So I try to be sure that we have an open forum. And whether it's within the company, or whether it's in the public domain, you learn. And it's there are some hard lessons. One I didn't mention, that in 2004 I ran as a Republican for the United States Senate in Colorado. I was out-funded by George Soros and Michael Moore.
I didn't appreciate them mixing it up in Colorado. But that's the reality of life. I got crosswise with a couple of Republicans because I criticized them for some of their what I thought pork projects. Senator Grassley gave me a really hard time one time. And [INAUDIBLE] he says, don't be messing around with my project. And I said, well senator, I said, we don't need that. It was an add on to get his vote on a bill.
So I try to maintain as much as possible balance. And when somebody goes off on me with a rant, you've got two options. You can just be patient and be quiet, or you can tell them to go screw themselves. And we can't have a debate. I'd much rather have the debate, and have them settle down and say let's talk about it. What is it makes you feel that way?
And we can do it in our daily lives. As I say, we went through it in the late '60s on this campus with Steven Ingrid and Marilyn will all remember. Bob Bryant and classmate will remember some of those challenging times. I just wanted to sit down with the black students and say, what's the problem here? And I understand more why it was, because we had to pledged fraternity brothers at Psi U that weren't allowed to join our fraternity because of that issue.
And I thought that was horribly unfair. They were great guys. We loved them. And I just think that when we pull each other apart and take positions that are non-conformist, we're losing a huge amount of the value of what an academic establishment is all about. The handling of Charles Murray and Charles [? the ?] [? friend ?] up in Middlebury, which was publicized quite a bit-- physical harm to a professor.
It's ridiculous. There's no room for that. And we have to have a civil campus, and they ought to be able to do their protest. I got a notice today there are going to be big protests on Earth Day, protecting science or something, and they're going to march all over the country. And hopefully, that's peaceful. Peaceful protests and demonstrations. Fabulous. We should do that.
Violent behavior, breaking windows, and fire-- burning police cars, and that kind of thing are really totally nonproductive. Actually, I think it works to the opposite of their intended purpose because people react to that negatively and want to say, hey, got different point of view? Let's hear about it. Let's not wreck the community that depends on commerce and so forth. It makes no sense.
I don't know. I [INAUDIBLE] answer your question, but there's no easy answer to it really. Other than to promote openness to ideas.
MARK W. NELSON: Well, with that, thank you so much for sharing your thoughts today.
PETER COORS: Thank you very much.
Peter H. Coors ’69, chairman and chief customer relations officer of Molson Coors Brewing Company, delivered the Samuel Curtis Johnson Graduate School of Management’s 29th annual Durland Lecture on April 18, 2017 in the Statler Hotel Amphitheater.
